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France Sends Envoy to Appease
Seoul After Thomson Bid Denial

Updated Jan. 8, 1997 12:01 a.m. ET

PATRIOTIC DUTIES: France attempts to mend relations with Seoul.

A special envoy of French President Chirac will visit Seoul next week to ease tensions over France's rejection of a South Korean bid to take over a division of Thomson SA, officials say. Jean-Claude Paye, a member of France's State Council, will meet with President Kim Young Sam and Cabinet ministers during a three-day visit. The move comes as the government's study continues into the relative merits of a flotation or a private placement for privatizing the firm, a French official says. France dropped plans to sell the loss-making defense and electronics group to Lagardere SA for the symbolic sum of one French franc, after it was revealed Lagardere was to sell the heavily indebted Thomson Multimedia unit to Daewoo Electronics Co. The decision has been harshly criticized by the South Korean media who call it prejudice against Korean businesses.

An eventual auction of Thomson would allow a fresh bid from engineering group Alcatel Alsthom -- passed over in the first attempt to sell off the group.

TAXING ALLIES: Germany's FDP tax-cut drive angers coalition partners.

Germany's Free Democrats, increasingly a loose cannon in Chancellor Helmut Kohl's ruling alliance, demand the abolition by 2000 of a tax levied to rebuild eastern Germany. At their traditional conference at Epiphany, FDP chiefs pressed for tax give-aways in the hope of winning enough votes to survive as a national force in 1998 general elections. Party leader Gerhardt says scrapping the so-called solidarity surcharge "has become a symbol of whether the state will cut the tax burden on citizens and businesses." The FDP demand follows a December row, which was settled by agreement on a two-percentage-point cut in the tax to 5.5% in 1998. The renewed tax debate comes just as a coalition working group is finalizing the tax reforms, intended to make big income tax cuts while ensuring Germany can maintain borrowing limits required under EMU.

Finance Minister Waigel argues that abolishing the solidarity tax would double the amount of spending cuts needed under a tax reform planned for 1999.

RESPECT THE RULES: German newspaper publisher Axel Springer AG protests against the Kirch Group's plans to increase its stake in Sat-1, a German TV channel in which both companies hold shares. To gain a majority in Sat-1, Kirch is planning to buy out two other owners, Ravensburger Film + TV and the Holtzbrinck Group. In a letter to the two, Springer says ownership changes require its approval. According to the corporate rule-book, the publisher also has first rights to a portion of their stakes. Springer says it doesn't necessarily want the stakes, but "Kirch makes it look like a done deal, which it isn't," says Springer.

INSURANCE POLICY: British life insurers warned in ratings report. Some British life-insurance companies are pursuing non-profitable new business in an attempt to grab market share and push prices below the reach of smaller competitors. A report by credit-rating agency Moody's Investors Service says mutually owned firms will need stronger partners if they are to compete effectively. It adds that further consolidation in the sector and a shedding of mutual status is also expected. The report comments that while "well-positioned U.K. life insurers will continue to be highly rated," downward pressure "will be exerted by the continued high level of competition." Since its last annual outlook, Moody's says there have been two positive developments in the industry: a significant upturn in new business sales since the third quarter of 1995, and a strengthening of investment markets over the last two years. But it warns that better performing markets are not a "panacea for the industry's ills," adding that a sustained bear market would hit insurers' capitalization.

MUTED RECEPTION: A new microchip from Intel Corp. will bring dazzling video features to standard desktop computers. But it won't do much to jazz up Europe's unsteady retail PC market. While the new MMX chips are expected to crank up the volume for U.S. retailers, analysts say the outlook in Europe is clouded by the weak German and French economies. In Germany, Europe's largest PC market, record unemployment and economic uncertainty are likely to keep many home computer users away from new MMX PCs. Market researcher IDC predicts European PC growth will only reach 6% in 1997 -- the lowest level in 10 years. But Britain's more robust economy may lead to a brighter reception there.

HUMMING BROKERS: The deregulation of the Nordic power market has been a gold mine for Norwegian power brokers. "Deregulations of power markets are still moving ahead," adds Rune Valle, managing director at power brokerage firm Markedskraft AS. While the firm estimates turnover at 20 million Norwegian kroner ($3 million) for 1996, Mr. Valle sees great potential in further spreading operations across borders. But the expansion in brokers has meant that Norway's commission fees drop to 0.3 ore (one hundredth of a Norwegian kroner) a kilowatt hour from 0.6 ore a KWH.

TOUGH CHOMPERS! Millions of sweet teeth boosted British confectionery sales by 5% last year to a record 4.9 billion pounds ($8.28 billion), according to a review by Cadbury and its sweet-making arm, Trebor Bassett. With volume sales rising to 833,000 tons, the figure reveals a growth of more than 12% over the last decade, says the Confectionary Market Review. U.K. citizens now become one of the highest confectionery consumption groups in the world eating an average of 13 kilos each every year -- exceeded only by Denmark and Ireland.